If you have a pension that is worth less than £18,000 now or £15,000 from April 2012, (1% of the £1.8 million Lifetime Allowance which is to change in 2012 to £1.5 million) there is the chance you will be allowed to withdraw the entire amount in a single lump sum. All pension savings are included in this amount though state pensions are not. There are a host of regulations involved when trying to withdraw this money including:
- You must be over 60 but under 75
- You must take all trivial benefits within one year
- Only 25% of this payment is free from income tax
Occupational pension scheme trivial payments may be paid on a separate basis with a set of alternative rules. Those who fall into the above category will probably not have enough money to go into drawdown.